Finance in Africa 2024 - Chapter 4: Regional banking performance

This chapter reviews bank performance at a regional level in North, West, Central, East and Southern Africa. Credit remains shallow across the regions, except for in Southern Africa. The share of credit to the private sector as a percentage of gross domestic product is 11% in Central Africa, 17% in West Africa and 21% in East Africa and 37% in North Africa but jumps to 65% in Southern Africa because South Africa and Mauritius have large and more developed financial sectors.

The ratio of non-performing loans to gross loans ranges from 6% in Southern Africa to 13% in Central Africa. Non-performing loans have fallen in most regions over the last year, allaying fears about delayed asset quality issues arising from the COVID-19 pandemic. Moreover, banking sectors remain sound, with capital ratios above regulatory minimums, though the large scale of bank lending to governments distorts capital ratios in some countries. (Capital ratios compare bank capital to risk-weighted assets. When banks lend to government, regulators often assign zero risk to government lending, which can greatly reduce the size of risk-weighted assets and make the banks’ capital buffers appear larger.)

A review of the pension industry in Southern Africa shows that between 2017 and 2021, pension fund assets grew steadily, led by South Africa, Namibia and Botswana.